Feature Article

October 18, 2012

Nokia Posts $1.27 Billion Net Loss, Pleasantly Surprising Investors

Nokia today released its results for the third quarter of fiscal year 2012 and the numbers aren't as bad as most were expecting. Certainly, the company has been having difficulty lately as it makes the transition from its Symbian mobile OS to Microsoft's Windows Phone and the numbers do reflect this: net loss for the period was $1.27 billion, while revenue dropped 19 percent compared to Q3 2011.

However, investors were expecting an even bigger sales drop and, as such, Nokia's shares rose.

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"The worst fears are over. Nokia's network operations were clearly better than expected, and its outlook for the rest of the year was better than expected," said analyst Hannu Rauhala from Pohjola bank in Helsinki. "The cash flow situation was not as badly negative as expected."

Nokia had been hoping for a smaller loss this quarter, though, and the company says it expects the fourth quarter to be unprofitable as well, not expecting great gains from the launch of its new series of Lumia Windows Phones. First generation Windows Phones shipped with version 7.5 of the OS and will not be upgraded to Windows Phone 8, which the upcoming Lumia 920 and 820 will feature.

Nokia's smartphone sales saw a drop in revenue by more than 50 percent year over year to $1.28 billion, with Lumia sales falling to 2.9 million units from four million in the second quarter of 2012.

"As we expected, the third quarter was a difficult quarter in our devices and services business. We continued to manage through a tough transitional quarter for our smart devices business as we shared the exciting innovation ahead with our new line of Lumia products," said Nokia CEO Stephen Elop.

The company's feature phones, meanwhile, sold well throughout Q3 while Nokia Siemens Networks, its joint venture with Germany's Siemens AG, saw three percent revenue growth, turning a first-time operating profit of just under $240 million.

Nokia is by no means down and out as the company's new flagship Lumia 920 is already generating a fair amount of buzz due to its high-quality camera with PureView technology and unparalleled image stabilization. The now-profitable Nokia Siemens Networks, meanwhile, recently expanded its LTE portfolio.

Edited by Brooke Neuman

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